yankee alliance data analytics project -...
TRANSCRIPT
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Spend AnalyticsSpend Analytics
August, 2007
Industry Overview and
Implementation
Mark ScagliariniDirector Account Management ServiceYankee Alliance
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Agenda• Introduction• What are Spend Analytic Tools?• Industry Issues• Long-term solution• Choosing a Spend Analytic Partner• Implementing Spend Analytic Tool
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• Founded in 1984• Headquarters in Andover, MA• Member of Premier• 42 Employees
Yankee Alliance
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Acute Care Members55 Acute Care Facilities
1,003 Senior Living Facilities1,423 Home Health Care Facilities
24 Surgery Centers47 Imaging Centers
19 Community Health Centers3,000 (+) Physicians
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Objective
Continually improve members’ financial and operational
performance through collaborative forums
and knowledge transfer
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YA accomplishes its objectives YA accomplishes its objectives through a through a collaborative process….collaborative process….
Members enhance learning by
participating in committees and forums
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Member Support• Dedicated Account Manager to support
members• Updates by Yankee Senior Team at member
facilities• Benchmarking Service Team and Management
Engineers• Clinical Resource Support (Clinical Pharmacist,
Perioperative Nurse)
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What is Yankee’s involvement?What is Yankee’s involvement?• Spent a half year evaluating tools available to
the market and determining our role
• Currently utilizing two tools• Premier’s My Spend • DDS
• 10 Yankee Alliance Hospitals participating in our program
• Provide members with “Optimization Resources”
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Spend Analytic ToolsSpend Analytic Tools
What are they?
AND
Why do we need them?
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What is a Spend Analytics Tool?What is a Spend Analytics Tool?
Software programs that collect clean, normalize, and match a
Hospital’s OWN data; in order to provide the Hospital with report generation capabilities.
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What does this mean to Cleanse, What does this mean to Cleanse, Normalize and Match Data?Normalize and Match Data?
Cleanse- To fix all of the catalog numbers, Unit of Measure, and description variances and mistakes.
Normalize- To link all catalog numbers, descriptions, and vendor names to one standard.
Match- To link all of a facilities’ items to the items that are on an existing GPO or Local contract.
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Data Acquisition ProcessData Acquisition ProcessFrequency
Varies by toolAs frequent as every
two weeksAs infrequent as once
per quarter
Files PO History Invoice History Item File Vendor Master Contract File
Generally these are easy custom reports for your IT departmentto create one time and then schedule to run.
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Why do we need Why do we need these tools?these tools?
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Healthcare Industry CrisisHealthcare Industry Crisis
Each year the healthcare industry loses $Billions based on sub-optimal performance of supply chain, lost productivity in resource intensive services and unnecessary variability in medical practice.
*Modern Healthcare 2006
Confidential
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We still cannot answer basic business questions easily:
What did I buy? Did I pay the right price? Did I use what I bought? Did I charge for what I used? Did I collect what I billed?
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Why can’t I use my MMIS?Why can’t I use my MMIS?• I spent millions on a Materials system…..
• I had a team of consultants assist with the implementation…..
• I maximize my eCommerce capabilities…
• I have even paid to have my data cleansed…..
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Answer: Data is not SynchronizedAnswer: Data is not Synchronized
The Healthcare Supply Chain is a non standardized marketplace
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The Problem:Different Product IDs throughout the Supply Chain
Mfg. Item Case Pallets Trucks Distributor Trucks Pallets Case Item Hospital Mfg. Item Case Pallets Trucks Distributor Trucks Pallets Case Item Hospital PatientPatient
End User
212345 6789072 212345 6789072
Manufacturer
212345 6789072212345 6789072
GLN, HIN, DUNS, ???
Mfg. # Mfg. # Dist. # ??? Hosp. #Item data , Data Sync, ship notice, invoice, recall
request for quotation, planning schedule, POElectronic Commerce Information Flow
FACTORY
Healthcare Industry
Product ID – Every participant in the supply chain may use a different product ID and there is no standard for unit of measure. {No common Identifier for products}
.
Each participant in the Healthcare Supply Chain has a different product number for the same product. Makes ordering, recalls, and proper identification to the patient difficult.
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Problems Found due to Product Identification *
* Source: Department of Defense Data Synchronization Study
Manufacturer Distributor GPO CustomerMissing Middle Levels of Pkging
15-20% 1-4% 20-25% 15-25%
Hard “Packaging Quantity” Errors
1% 1% 2% 2-5%
Unit of Measure Confusion/Misuse
2-6% 1-3% 2-5% Unknown
Missing Packaging—not Middle Level
3-8% 3-8% 3-7% 5%
Manufacturer Name Problems
NA 2-5% 1-4% 30%
Obsolete Products 1-4% 2-5% 1-8% 5-15%Missing Product Brand Names
2-5% 5-10% 5-10% 20-25%
Incomplete Item Descriptions
5-15% 3-12% 5-15% 10-20%
Wrong Customer Unit Prices
Unknown 1-2% NA 1-2%
Customer Paid More Than Lowest Contract Price
NA Unknown NA 3-6%
Percentage of Total
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Business Name Item Number Type Item NumberBD Mfg Catalog Number 329461BD GTIN 00382903294619BD GTIN 30382903294610 BD GTIN 50382903294614CARDINAL HEALTH PV Order Number BF329461OWENS & MINOR PV Order Number 0722329461OWENS & MINOR PV Order Number 0723329461AMERICAN MEDICAL DEPOT Vendor Catalog Number 777127217AMERICAN MEDICAL DEPOT Vendor Catalog Number 777127218GOVERNMENT SCI SOURCE Vendor Catalog Number FSC1482679CSGOVERNMENT SCI SOURCE Vendor Catalog Number FSC1482679PKALLIANCE JOINT VENTURE Vendor Catalog Number 888021932 THOMAS SCIENTIFIC Vendor Catalog Number 8938M25THOMAS SCIENTIFIC Vendor Catalog Number 8938M28VWR INTERNATIONAL Vendor Catalog Number BD329461
Bad Data: Multiple Product Numbers(329461 - 1/2 mL BD Lo-Dose™ U-100 insulin syringe with 28 G x 1/2 in. BD Micro-Fine™ IV permanently attached needle)
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Bad Data leads to multiple customer problems
What you “see” may not be what you want or get
Multiple Manufacturer Names
What is it?
Difficulty in ordering
Order 50 receive 500 or
Order 20 cases, receive 20 boxes
Multiple Product Numbers
Inconsistent Item Descriptions
Packaging Issues
Old product data Attempting to order obsolete products
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Hospital ImpactHospital Impact Premier contracts with over 300 Manufacturers
One Yankee Pilot Hospital has over 1800 different names Less than 23% of the manufacturer names match Premier
Premier has written over 1,300 contracts that cover almost a million items The average manufacturer uses 3 valid catalog numbers per
item Premier only has 1 catalog number per item in its contract file The Pilot Hospital has less than 1% of the contract items used
contain the same catalog number as the number used by Premier (234 exact matches out of 29,466 actual contract items used)
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Cost of Dirty DataCost of Dirty Data 60% of all invoices have errors
Each individual invoice cost $40 - $400 to reconcile
Erroneous data increase supply cost 3-5%
$2 to $5 Billion dollars is lost each year due to supply chain inefficiencies
Source: 2003 CHeS and Healthcare eBusiness Collaborative Study
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Suppliers Transportation Manufacturers Distributors GPO’s Providers/Consumers
Synchronizing the Healthcare Supply Chain
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GLN
Farm Item Case Pallets Trucks Distributor Trucks Pallets Case Item Store Farm Item Case Pallets Trucks Distributor Trucks Pallets Case Item Store CustomerCustomer
End User
212345 6789072 212345 6789072
Supplier
212345 6789072212345 6789072
HARVESTING
GTIN GTIN SSCC GTIN GTINItem data , Data Sync, ship notice, invoice, recall
request for quotation, planning schedule, POElectronic Commerce Information Flow
Grocery Industry
The Solution:Same Product ID’s - Other Industries
GTIN - Global Trade Item Number - Identifies trade items (products and services) sold, delivered, warehoused, and billed throughout the supply chain. {One Identifier for products}
SSCC – Serial Shipping Container Code - System identification for logistic units. Contains the GTIN identification
In most other industries such as the Grocery industry there is a consistent Product ID throughout the supply chain.
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Supply Chain Models
Manufacturing Distributing Provider
PATIENT
Product
Cash and Information
Healthcare Supply Chain
Efficient Supply Chain
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Who is Working on this in the USA?
Organized in 2001Most of the Largest GPO’s Two eCommerce ExchangesThe DOD and VAAdditional Affiliate Members
CHeS Purpose: Working Together to Adopt and Promote Uniform Industry Data Standards.
CHeS Initiatives: Customer Identification (GLN)
Product identification (PDU)
Product Classification (UNSPSC)
http://www.chestandards.org
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Provider Data Receipt• Premier receives data via GDSN• Distributes to Baptist via Lawson
Manufacturer Loading• 10 items from Sage• 11 items from BD• Documentation of Challengesand Lessons Learned
Hospital(Baptist /Lawson)
+
DOD Healthcare GDSN Pilot
GPO(Premier)
Manufacturers(BD, Sage)
On BoardingPartner(Ontuet)
On BoardingPartner(Ontuet)
Global Registry
1SYNC Data Pool
GDSN
Phase II Execution & Participants
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Medical Industry Product Data Utility - Powering the Supply Chain
MMISVendors
eCommerceExchanges
FederalData
Provider
Distributors
GPOs
Medical industry PDU provides and synchronizes clean manufacturer Medical industry PDU provides and synchronizes clean manufacturer product data to primary players in the medical supply chainproduct data to primary players in the medical supply chain
ProductData
Utility
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While these are great initiatives…..
They are years away from becoming reality.
And hospitals today cannot afford to wait!
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Fortunately technology has caught up to be able to provide us with solutions, today!
UNCOVER SAVINGS OPPORTUNITIES
CONTRACT MANAGEMENT
MAXIMIZE TIER SELECTION
AUDIT PRICE PAID
AUTOMATE COST ANALYSIS
BENCHMARK PRICING
Spend Analytic ToolsSpend Analytic Tools
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Who offers these tools?Who offers these tools?• National GPO’s
• Premier “My Spend”• Novation “Spend • Amerinet “Diagnostix”
• Advisory Board- “Spend Compass”• Independent Technology Companies-
“Deman Data Systems”
• Consulting Companies
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Picking the right Spend tool Picking the right Spend tool to Partner withto Partner with
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Things to consider when evaluating Things to consider when evaluating spend analytic tools:spend analytic tools:• Data accuracy (Most Important!!)
– UOM Issues– Data match rates
• Contract matching ability
• Benchmark philosophy
• Actionable reports
• Implementation support
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What What businessbusiness objectives are you objectives are you looking to accomplish?looking to accomplish?
1. Identify total spend2. Identify Unsigned contracts3. Non-contract item identification4. Run market share reports5. Automate contract conversions6. Compare contracts7. Price benchmarks8. Savings and utilization trackers
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First Identify: What you are looking First Identify: What you are looking for in a tool.for in a tool.For Example:• Volume vs. Market share analysis
• Contract expiration vs. Contract conversion
• Real time vs. Quarterly
• On-line tool vs. Engaged implementation team
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Answering those questions will Answering those questions will help you determine which tool help you determine which tool and which company to partner and which company to partner
with.with.
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Current report optionCurrent report option• IMS• Distributor• GHX• Current GPO reports
If you don’t use these “free” and available reports today, how will use all of the Spend Analytic Reports???
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IMPLEMENTATIONIMPLEMENTATION
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““Putting out fires”Putting out fires”
• It is easy to get caught up in day to day operations
• Pick a good partner to assist and guide your department through this process.
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Step 1: Validate DataStep 1: Validate Data
Check sample data sets to verify accuracy of reportsNo tool is perfectHighlight and check large variance’s firstMost tools gain in effectiveness and accuracy the
longer they work with your data
Add in distributor mark-ups, equipment sur-charges, etc. (if your tool allows)
Build faith in tools and data
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Prioritize opportunitiesPrioritize opportunities
Start Easy and Get Early Wins.
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Divide data into different areas of focusDivide data into different areas of focus
1. Unsigned Contracts– Start Easy– Look at contracts that you are already purchasing
from but have not signed
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What are Unsigned Contracts ?What are Unsigned Contracts ?
Products that a hospital is already buying but have not signed the available contracts.
Future Contract Analysis
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Peripheral and Biliary Stent Marketshare
3.79%
69.50%
10.03% 1.10%Abbott Marketshare
Boston Scientific Marketshare
CR Bard Marketshare
J&J Marketshare
Tier Maximization
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Tier MaximizationTier Maximization
Our reports showed: Unsigned contract savings opportunity of $8,481 Achieved by signing Tier 3 with 70% market share compliance
Manufacturer denied tier 3 with no explanation
Resolution:1) Provided Manufacturer with market share data demonstrating compliance.2) Manufacturer approved the tier position.3) Manufacturer approved a retro credit
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Areas of Focus Cont.Areas of Focus Cont.
2. Credits: Audit Price Paid– Tools can compare price paid to signed
contracts– Collect retro credit
As a contract management tool you can load your contracts and audit your invoice pricing to ensure on-going accuracy.
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Areas of Focus Cont.Areas of Focus Cont.3. Non-Contract:
– Most tool can show you the items that are not on a contract
– Ask yourself a few basic questions:– Can they be added to a contract?– Can they be converted to an existing contract?– Do I need to negotiate my own local contract
4. Negotiating Own Local contracts:– Utilize tools volume and market share reports – Utilize tool’s benchmark pricing to negotiate new
contract
You have the data…
USE IT!
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Goals for Non-Contract ItemsGoals for Non-Contract Items Convert to existing contracted
manufacturer.
Add items to an existing National GPO contract.
Facility to negotiate local hospital contract.
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Develop your own process flowDevelop your own process flow
Largest area of opportunity
“Not Low Hanging Fruit”
Work closely with GPO and Spend Analytics provider to manage this process
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New Contracting OpportunitiesNew Contracting Opportunities
$71,912,254
*Based on 5 hospitals current non-contract spend.
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Areas of Focus Cont.Areas of Focus Cont.5. Contract Conversion
– Some tools prove the ability to do automated contract conversions
– More efficiently evaluate and convert to your new GPO contracts.
6. Standardization and Utilization– How many different glove manufacturers do you have?– Are you using different manufacturers in Interventional
Radiology vs. Operating Room?
– Can you standize to one vendor to maximize your contract tier position?
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Contract Conversion OpportunitiesContract Conversion Opportunities1. New GPO Contract Opportunity
2. Spend Analytics tool can provide facility’s usage, calculate market share and contract’s cost impact.
3. This new process helps the hospital prioritize opportunities and accelerates the contract uptake timeline.
The hospital now has the data it needs to present the cost savings opportunity to the appropriate department head or clinician for clinical approval.
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Hospital’s current price
$1,447
Hospital item
numberincluded
New Yankee Alliance
price$950
Cost impact
calculated$497
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Trending Product UtilizationTrending Product Utilization
Hospital’s Drug Eluding Stents by Quarter
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Track Conversions and Product ChangesTrack Conversions and Product Changes
$2,609.26
$38,896.98
$137,027.00
$79,285.29
$101,717.29$106,292.00$104,202.00
$113,114.00
0
20000
40000
60000
80000
100000
120000
140000
160000
Jan Feb Mar Apr May Jun July Aug.
Spen
d p
er M
onth
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Organizational ValueOrganizational Value• Integrate tool and data throughout your organization.
• Engage CNO, Chief of Surgery, CFO, Department Directors, etc.
– Now that you have the data it is much easier to go the administrators to recruit their support on a conversion or a negotiation.
• Incorporate the data into your Value Analysis Meetings.
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What are your hospitals current What are your hospitals current areas of focus?areas of focus?
Incorporate data into already existing projects
Start with your hospitals “hot buttons” or problem areas
Start NEW with expiring and replacement contracts, rather then going back in time.
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For our hospitals this has opened up new For our hospitals this has opened up new opportunities, that were previously opportunities, that were previously overlooked…..overlooked…..
1. Trocar Evaluation and Conversion2. Orthopedic Screw and Plate
conversion3. Standardization on Bone and Tissue
Suppliers4. Peripheral Stent Evaluation and
Conversion
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“The first rule of any technology used in a business is that automation applied to an
efficient operation will magnify the efficiency.”
“ The second is that automation applied to an inefficient operation will magnify the
inefficiency.”
Bill Gates
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Self AssessmentSelf Assessment Do you have an effective contract management system
in place?
Are you evaluating all new GPO contracts and activating them?
Do your buyers check GPO contracts when placing orders and verify confirmation mismatches?
Are you maximizing your eCommerce options?
Are you tracking savings?
Do you have an effective Value Analysis Process?
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Challenges:
• Data can be overwhelming
• Not everyone likes working with data
• Not everyone is good at working with data
• Department is way to busy already
Things to consider:
• Evaluate current processes and incorporate data into those processes
• It is much easier to manage on going as part of your daily work, rather then solely as a separate project.
• “Don’t get caught in the trees with endless drilling…..”
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Contact AnalystContact Analyst Do you need a dedicated contract manager or
analyst?
An individual that focuses solely on managing your contracts and product conversions
They are not “firemen”!
Best Practice Tip:
We have found that our hospitals that have had the most success and documented the most savings are the ones that have had a dedicated Individual to this project.
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Top 3 important aspect of a good report:
1. ACTIONABLE2. ACTIONABLE3. ACTIONABLE
IF YOU CAN’T QUICKLY ACT ONTHE INFORMATION PROVIDED IN THE REPORT,
THEN IT MAY NEVER BE ACTED UPON!
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Track savings and improved efficiencies!
Use the tool to demonstrate it’s ROI as well as your department’s
hard work.